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situation Two (15 points) Chengsi runs a small lawn mowing (cutting) firm. He estimates that the price elasticity of demand for his service is somewhat
situation Two (15 points) Chengsi runs a small lawn mowing (cutting) firm. He estimates that the price elasticity of demand for his service is somewhat above 1.0. His main competitor is Felipe's mulch company. Felipe is asking the mayor of Cedar Falls, James, to consider taxing suppliers of water: "Global warming is drying up our water supply. We have to cut water usage." Consider how this will affect Chengsi's business. What will happen to the price and quantity sold of his lawn mowing (cutting) firm? How will things change in the long-run? Who is more likely to help Chengsi and why: John (who runs a garden furniture store) or Stephane, who runs a flat rock (used in home gardens) supply store. Because lawn mowing (cutting) and water are how will this affect the price and quantity of Chengsi's lawn mowing (cutting) firm? Price will Quantity will In the long-run, the price elasticity of demand becomes elastic. (more / less / unchanged) Who should help Chengsi in fighting the tax and why (need both for 3 points) ? because he / she produces a
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